Take A Look At Wall Street's Favorite Retail Stocks After A Big Earnings Week

The retail sector witnessed significant activity and developments as some of its major players reported their earnings last week. However, as investors reflect on the outcomes of the week, they find themselves navigating various factors and evaluating different perspectives. Notably, Walmart delivered better-than-expected earnings and provided a strong outlook, while Foot Locker fell short of Wall Street's expectations for the quarter and offered less inspiring guidance for future performance.

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These reports emerge amidst broader concerns surrounding the sector, such as the sustainability of consumer spending in light of rising interest rates and fears of a potential recession. In light of this landscape, CNBC Pro conducted a thorough screening of Wall Street's most favored retail stocks. The selection process involved examining all stocks in the SPDR S&P Retail ETF (XRT) with market capitalizations exceeding $1 billion, excluding car and auto dealership names. The following 12 stocks meet the criteria of having at least 55% of analysts rating them as a buy, with an average potential upside of over 10%.

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Walmart, a retail giant, secured a place on the list with over three out of every five analysts recommending the stock as a buy. Furthermore, the average upside suggests that the stock could experience a 10.8% rally in the next year. Since the beginning of 2023, Walmart's shares have already increased by 5.7%. The company surpassed Wall Street's expectations in its fiscal first quarter report, delivering strong performance in both top and bottom lines. Walmart attributed this success to robust grocery and online sales, which offset any weaknesses observed in clothing and electronics. In response to the impressive quarterly report, Walmart raised its full-year earnings guidance.

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Another reporting company that made the list is TJX, the parent company of T.J. Maxx, Marshalls, and HomeGoods. While the company reported a revenue miss and provided weak future guidance, the earnings per share for the quarter exceeded expectations according to FactSet. Although TJX's shares have experienced a slight decline of approximately 0.3% this year, more than 56% of analysts rate the stock as a buy. The average price target indicates a potential rally of 11.3%.

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E-commerce giant Amazon also met the screening criteria, receiving buy ratings from around three-fourths of analysts and boasting an average potential upside of 12.8%. Amazon's stock has surged by 38% this year, recovering along with other prominent names in the Big Tech sector. The company surpassed analysts' revenue expectations for the first quarter. However, investor attention remains focused on the uncertainties surrounding the future performance of its cloud business.

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Discount retailer Dollar General is favored by nearly three-fifths of analysts, receiving a buy rating. The average upside suggests that the stock could advance by 10.7% over the next year. This projection would mark a turnaround, considering the stock's decline of over 12% year-to-date. The company is scheduled to report earnings for its first fiscal quarter on June 1.

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